Johns v Hamilton City Council
[2022] NZHC 379
•7 March 2022
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA
KIRIKIRIROA ROHE
CIV-2019-419-222
[2022] NZHC 379
BETWEEN BRYCE JASON JOHNS
Plaintiff
AND
HAMILTON CITY COUNCIL
First Defendant
(continue over page)
Hearing: 10 – 26 May 2021 Appearances:
B Easton and A Sales for Bryce Johns
P Robertson and S Mautner for Hamilton City Council Garth Davey in person
A Foster for Elite Coastal Developments Limited, Daniel Gujer and Hamish Stewart
Simon Bell in personD Shore and A Hong for Next Level Roofing Limited and Ross Cameron
Judgment:
7 March 2022
Reissued:
13 June 2022
JUDGMENT OF HARLAND J
This judgment was delivered by me on 7 March 2022 at 3:30 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar Date……………………………..
Counsel/Solicitors: Grimshaw & co, Auckland Heaney & Partners, Auckland Foster & Milroy, Hamilton McCaw Lewis, Hamilton
Norris Ward McKinnon, Hamilton Copy to: S Bell
JOHNS v HAMILTON CITY COUNCIL [2022] NZHC 379 [7 March 2022]
GARTH WARWICK DAVEY
Second Defendant
EVOLVE ARCHITECTURE LIMITED
First Third Party
JAMES PARROTT
Second Third Party (Discontinued)
MARK and SUSAN BOOTH
Third Third Party (Discontinued)
ELITE COASTAL DEVELOPMENTS LIMITED
Fourth Third Party
DANIEL GUJER
Fifth Third Party
HAMISH JOHN STEWART
Sixth Third Party
WESTGATE FOR ROOFING LIMITED
Seventh Third Party
CONCEPT PLASTERING LIMITED
Eighth Third Party
SIMON BELL
Ninth Third Party
CIV-2020-419-153
BETWEEN HAMILTON CITY COUNCIL
Plaintiff
AND JAMES PARROT
First Defendant (Discontinued)
ELITE COASTAL DEVELOPMENTS LIMITED
Second Defendant
DANIEL GUJER
Third DefendantHAMISH JOHN STEWART
Fourth DefendantWESTGATE FOR ROOFIING LIMITED
Fifth Defendant (Discontinued)
CONCEPT PLASTERING LIMITED
Sixth DefendantSIMON BELL
Seventh Defendant (Discontinued)
NEXT LEVEL ROOFING LIMITED
Eighth Defendant
ROSS CAMERON
Ninth DefendantGARRY ROSS RICHARDSON
Tenth DefendantBELL BUILDERS LIMITED
Eleventh Defendant
TABLE OF CONTENTS
PART ONE: INTRODUCTION.................................................................................... [1]
An overview of the claims..................................................................................... [2]
The issues............................................................................................................. [21]
PART TWO: BACKGROUND FACTS....................................................................... [22]
PART THREE: LEGAL PRINCIPLES......................................................................... [68]
The claim in negligence (the Johns proceedings)................................................ [69]
The claim under the Law Reform Act (the Council’s proceedings) [85]
PART FOUR: THE alleged DEFECTS......................................................................... [87]
Overview............................................................................................................. [87]
The expert evidence generally............................................................................. [95]
Generic expert evidence about council practices [98] Specific challenge to Mr Gray’s expertise about council practices [104] Was the wrong test applied by Mr Gray? [107]
Methodology challenges to Mr Gray’s evidence [113]
General observations about expert evidence [115] The defects generally............................................................................................................. [116]
Water ingress through the top of the building (Defects 3-5).............................. [119]
Defect 3: poorly formed roof metal parapet cap flashing junctions (unsealed gaps, laps not fully sealed, no under-flashings) [122]
Conclusion in relation to Defect 3 [158]
Defect 4: no provision to seal or flash rivet penetrations through the roof metal parapet flashings. [161]
Defect 5: poorly formed parapet to wall junctions [181]
Overall conclusion about Defects 3 – 5 [212]Water ingress through the deck (Defects 6 and 7)............................................. [214] Defect 6: incorrectly installed deck membrane to wall upstands [217] Defect 7: poorly installed balustrade fixing [241] Water ingress around the windows (Defect 1)........................................................................................................................... [271]
Defect 1: poorly sealed or unsealed gaps between the cladding and joinery [271] Who is liable for this defect? [304]
Lack of ventilation (Defect 2)........................................................................... [312]
Defect 2: lack of sufficient cladding cavity drainage and ventilation [312] Conclusion re: defects............................................................................................................... [333]
Liability of directors.......................................................................................... [333]
Overall assessment of defects........................................................................... [339]
PART 5: QUANTUM AND APPORTIONMENT....................................................... [341]
Quantum............................................................................................................ [342]
Losses [343]
Interest [361]
General damages [363]
Costs [368]
Apportionment................................................................................................... [369]
Defect-by-defect or overall apportionment? [369]
What percentage is appropriate in this case? [377]
RESULT.................................................................................................................. [392]
PART ONE: INTRODUCTION
[1] This case concerns a property at 896A River Road, Hamilton, which Mr Johns owned between August 2009 and May 2019. The dwelling house on the property was constructed with weathertightness defects, which Mr Johns was required to repair before he could sell the house. Mr Johns sues to recover his losses against the Hamilton City Council and Mr Davey, the original developer and builder. He also claims general damages of $25,000 for stress and anxiety, as well as interest and costs. In turn, the Council and Mr Davey sue to recover against those they say were responsible for creating the defects.
An overview of the claims
[2]There are two proceedings before the Court.
[3] The first proceeding (CIV ending 222) is Mr Johns’ claim in negligence against the Hamilton City Council (the Council), and Mr Davey as the developer and builder of the dwelling. The remaining parties were joined as third parties by Mr Davey, and there is a cross claim by both the Council and Mr Davey against each other. These cross claims relate to the contribution any of the named parties should make to any sum I determine is payable if either or both defendants are found liable in negligence for any of the defects.
[4] The second proceeding (CIV ending 153) is a claim by the Council against the named defendants under s 17 of the Law Reform Act 1936 seeking a contribution from each of them if I find the Council liable in negligence for any of the defects.
[5] I refer to these proceedings as “the Johns proceedings” and “the Council’s proceedings” in this judgment.
[6] The dwelling house is one of two identical townhouses built on the property in 2008. The structure comprises conventional light timber framed external walls set beneath a low-pitched rafter and trussed roof system, with plastered brick veneer,
polystyrene (EIFS) and Titan board cladding. There is an enclosed deck comprising floating tiles in PVC supports over a waterproof membrane.
[7] Schedule 1 to Mr Johns’ amended statement of claim1 outlines the defects he claims have caused his losses. It provides:
Schedule 1 Defects/Damage
Defect Location Breach 1. Poorly sealed or unsealed gaps between the cladding and joinery North, east and south elevations NZBC B2 Durability NZBC E2 External moisture 2. Lack of sufficient cladding cavity drainage and ventilation All elevations NZBC B2 Durability NZBC E2 External moisture 3. Poorly formed roof metal parapet cap flashing junctions (unsealed gaps, laps not fully sealed, no under
flashings)
Roof NZBC B2 Durability NZBC E2 External moisture 4. No provision to seal or flash rivet penetration through the roof metal parapet flashing Roof NZBC B2 Durability NZBC E2 External moisture 5. Poorly formed parapet to wall junctions West and south elevations NZBC B2 Durability NZBC E2 External moisture 6. Incorrectly installed deck membrane to wall upstairs Deck on west elevation NZBC B2 Durability NZBC E2 External moisture 7. Poorly installed balustrade fixings Deck on west elevation NZBC B2 Durability NZBC E2 External moisture
[8] Mr Johns claims that these defects required the entire dwelling to be re-clad. The alleged defects do not relate to the weathertightness of the cladding itself. Rather, they relate to alleged poor workmanship during the construction of the dwelling in 2008. In the case of the deck, it is contended by the Council and Mr Davey that the defects were caused or contributed to by Mr Bell or Bell Builders Ltd when Mr Bell undertook unconsented works in 2014 at Mr Johns’ request to fix weathertightness issues associated with the deck.
1 Dated 10 July 2020.
[9] Mr Johns claims that the Council was negligent in issuing the relevant building consent, carrying out its inspections during the construction of the dwelling and issuing a code compliance certificate at the end of the build. He claims that the Council is liable for the costs associated to remedy all the defects.
[10] The Council accepts that it owes Mr Johns a duty to exercise reasonable skill and care; however, it does not accept that it breached this duty. If the Court finds that it did breach the duty, the Council claims against those it contends are primarily responsible for each of the defects, as outlined below. In relation to the amount of the losses claimed, the Council claims that part of these losses amount to betterment and that Mr Johns has caused or contributed to his own loss by having additional work done on the deck, without the required building consent.
[11] Mr Johns also claims that the second defendant, Mr Davey was negligent as the developer and builder of the dwelling and that he is also liable for the costs associated to remedy all the defects. Mr Davey accepts he owed a duty of care to Mr Johns as the developer of the property and builder of the dwelling; however, he denies any breach of that duty. His case is that subcontractors were responsible for all the defects, and if he is found to be liable, he should be completely indemnified for all losses associated with defects caused by them. So much is clear from Mr Davey’s pleadings, which were filed when he was represented by counsel.2
[12] The Council initially issued a cross-claim against Mr Davey as a concurrent tortfeasor, however, the cross-claim has been superseded by the Council’s separate proceedings under the Law Reform Act. Mr Davey also issued a cross-claim against the Council as a concurrent tortfeasor, seeking a contribution or indemnity under s 17(1)(c) of the Law Reform Act.
[13] Evolve Architecture Ltd (Evolve Architecture) and Mr Parrott were joined by Mr Davey as first and second third parties in CIV ending 222. Mr Parrott is a director of Evolve Architecture and was the person who undertook the design of the dwelling. Both these parties filed a statement of defence to Mr Davey’s claim against them. Mr Davey’s evidence did not address his claim against Evolve Architecture or
2 Mr Davey has represented himself since 21 August 2020.
Mr Parrott. The claim is dismissed. The Council discontinued its proceeding against Mr Parrott on 18 November 2020. The Council did not join Evolve Architecture as a party to its proceeding.
[14] Mark and Susan Booth were joined by Mr Davey as third third parties in the Johns proceedings. The pleadings identify that they were co-developers of the property together with Mr Davey. Mr Davey discontinued his claim against them on 8 June 2020.
[15] Elite Coastal Developments Ltd (ECDL) is the fourth third party in the Johns proceedings and the second defendant in the Council’s proceedings. It operates as a building construction company and its directors are Mr Gujer and Mr Stewart (who are also third parties and defendants). ECDL had a verbal contract with Mr Davey to provide labour only services in respect of parts of the construction of the dwelling. Although Mr Gujer and Mr Stewart worked on the dwelling as builders “on the tools”, they deny liability for the construction defects (Defects 1 and 5) alleged to be attributed to them personally.
[16] Westgate For Roofing Ltd (Westgate) is the seventh third party in the Johns proceedings and the fifth defendant in the Council’s proceedings. It is the roofing company contracted by Mr Davey in relation to the construction of the dwelling. It has taken no steps in respect of the proceedings. A notice of discontinuance dated 10 May 2021 in respect of Westgate was sought to be filed by the Council, however subsequently Mr Robertson confirmed that it was withdrawn.3 There is also a third party claim by Mr Davey against Westgate. Mr Davey attributed Defects 3 and 4 to Westgate.
[17] Westgate subcontracted Next Level Roofing Ltd (NLR), the director of which is Mr Cameron (the eighth and ninth defendants in the Council’s proceedings), to provide roofing labour only services in respect of the dwelling. NLR claims a contribution against Westgate if it is found liable for any losses, however it has not
3 Johns v Hamilton City Council HC Hamilton CIV-2019-419-222, 18 May 2021 (Bench Minute No.2).
filed a cross-claim or third party proceedings against Westgate. NLR is not a party in the Johns proceedings. The Council claims NLR is liable for Defects 3 to 5.
[18] Concept Plastering Ltd (the eighth third party the Johns proceedings and the sixth defendant in the Council’s proceedings) and its director Mr Richardson (the tenth defendant in the Council’s proceedings) provided plastering services during the construction of the dwelling. Neither Concept Plastering nor Mr Richardson have taken any steps in either proceeding.4 The claims against Concept Plastering during the hearing seemed to relate only to Defect 2, however, Mr Davey’s third party statement of claim also however, referred to Defects 1 and 5.5
[19] Mr Bell, a builder who was responsible for work done on the deck in 2014 is the ninth third party in the Johns proceedings, the seventh defendant in the Council’s proceedings and his company, Bell Builders Ltd (Bell Builders), appears as the eleventh defendant in the Council’s first amended statement of claim dated 19 November 2020 in relation to its proceedings.
[20] Counsel for the Council filed a notice of discontinuance6 during the hearing in respect of Mr Bell as seventh defendant, but not against Bell Builders as eleventh defendant. Although Mr Davey appears to have also signed this notice of discontinuance, he resiled from it when the issue was raised during the hearing. He continues his claim against Mr Bell. Mr Bell appeared in person for the first part of the proceeding, however, when it came for the presentation of his case, he was not present.7 His brief of evidence dated 12 February 2020 was therefore not formally admitted as evidence in the proceeding.
4 Johns v Hamilton City Council, above n 3.
5 As well, Mr Davey’s response to questions 6(c)(i) and (ii) of the Council’s amended notice to answer interrogatories referred to Concept Plastering being liable for Defects 1 and 2.
6 Dated 10 May 2021.
7 Mr Bell was originally represented by counsel but as of 14 April 2021 represented himself. My First Bench Minute of 18 May 2021 addresses Mr Bell’s non-appearance.
The issues
[21]The issues I need to determine are:
(a)Have any of the alleged defects caused or contributed to damage to the dwelling?
(b)If they have;
(i)who is liable for the defects?
(ii)what are the reasonable repair costs made necessary by the defects?
(iii)has appropriate allowance been made for betterment and/or contributory negligence?
(iv)is Mr Johns entitled to general damages?
(v)what damages is Mr Johns entitled to against each of the defendants?
(vi)what contribution are the Council and Mr Davey entitled to from other defendants/third parties?
PART TWO: BACKGROUND FACTS
[22]Most of the following background was included in a chronology.
[23] Mr Davey is a builder of some 30 years’ experience. He is now a licensed building practitioner but was not at the time the dwelling was built.
[24] The title of 896A River Road, Hamilton records Mr Davey as the owner from 13 June 2007, although he together with Mark and Susan Booth were the developers of the property. The plan was to demolish the existing dwelling and, in its place, build two identical new dwellings. Mr Davey was to live in the front dwelling and the rear
dwelling (the one with which I am concerned) was to be sold. This is what eventually occurred.
[25] Mr Davey said his role in the development was to organise the finance with the Booths and to contract the builders and subcontractors for the build.
[26] On 18 June 2007, Mr Davey applied to the Council for a building consent to demolish an existing dwelling on 896 River Road, Hamilton. That application was granted on 29 June 2007. Later in 2007, just before Christmas, Mr Davey applied to the Council for a land use consent to construct two dwellings on the property. He also applied for a two-lot subdivision.
[27] On 11 February 2008, the Council granted Mr Davey subdivision and land use consents.
[28] On 22 February 2008, Mr Davey applied to the Council for a building consent for the construction of two new two-storey buildings with attached garages. The buildings were designed by Mr Parrott of Evolve Architecture. There was an amendment to the application, however consent for the build was subsequently granted by the Council on 20 March 2008.8
[29] At some point in March 2008, the construction of both dwellings began, the plan being to construct them on site simultaneously. Mr Davey told me that as well as contracting the builders and subcontractors, he organised the attendance of the contractors on site to fit in with the building programme. Although an experienced builder, Mr Davey said he did not personally carry out any building work on the site. He was, however, clearly the project manager.
[30] Mr Davey contracted ECDL to work on the site on a labour only basis. At that time, Mr Stewart and Mr Gujer were young (26 and 24 years of age respectively) but both had been working as builders for about eight years. Like Mr Davey, both are now licensed building practitioners.
8 There were in fact two building consents: one to demolish the existing building and one to construct two identical buildings on site. I am concerned with the latter.
[31] Mr Stewart and Mr Gujer had met Mr Davey at an Acorn ITM breakfast. It was after this Mr Davey approached them with a view to building the two new houses at 896 River Road. At that stage, Mr Stewart told me, there was a building recession. I infer both considered the offer to be a good opportunity. Due to their relative inexperience in pricing jobs, the labour only arrangement appears to have been reached following a discussion in which Mr Davey told them the rate he was prepared to pay for their services. The price was agreed upon; however, nothing, including the scope of the work to be undertaken by ECDL, was recorded in writing.
[32] Mr Stewart and Mr Gujer commenced work on the site. They worked together on both properties with the help of several apprentices. Both told me that Mr Davey organised all the materials and the Council inspections, and he also directed and managed all subtrades, including them, on site daily. I accept their evidence about this.
[33]ECDL was responsible for the following building work:
(a)laying the foundations and concrete slab;
(b)erecting light timber frames;
(c)installing the first floor on a suspended timber frame;
(d)constructing the low-pitched timber rafter and a truss roof system;
(e)installing the aluminium joinery, excluding the ranch slider to the deck;
(f)closing in;
(g)installing interior lining and doors;
(h)finishing lines and hardware fit off.
[34] Mr Stewart said that Mr Davey directly supervised all the above work. He said Mr Davey checked all the work which had to be done as he directed. In short, the
evidence for ECDL invites me to find that the work it did on the dwelling was directed and supervised by Mr Davey. Mr Davey did not contradict this evidence apart from in relation to any alleged defects between the titan panel and parapet wall (Defect 5). I address this later in my judgment when I analyse alleged Defect 5.
[35] Mr Davey contracted Westgate to install the roofs on both properties. He said he had used Westgate or its principal as his roofing contractor for his entire building career and that he had never had any difficulties with them or their work. In his reply to the Council’s notice to answer interrogatories Mr Davey attributed Defects 3 to 5 to Westgate, although in relation to Defect 3 he noted that Westgate may have subcontracted the job to NLR, but the person who undertook the work was “unknown”. In his evidence before me, Mr Davey said that NLR was responsible for the roof and all flashings, junctions and sealing of all flashings including the parapet flashings.
[36] Westgate subcontracted the roofing work for the build to NLR. Mr Cameron told me that NLR was incorporated on 21 August 2006. It was a labour only roofing contractor at the time of the build and Westgate was its only client.
[37] Mr Cameron told me that NLR carried out about 350 jobs for Westgate between 2006 and 2008. The process was that Westgate would contact Mr Cameron and the following would occur:
(a)NLR would be given or faxed a job sheet which would include the property address, the square metre rate that NLR would be paid for roofing and a rate for flashings, together with a hand-drawn diagram of the roof layout which specified roof sheet length and where they were to go, with specific flashings required;
(b)On the scheduled day for the work, NLR would pick up any consumables (screws, rivets or underlay) from Westgate’s yard and travel to the site. The larger materials were delivered to the site and NLR would check in with whoever was managing the site to get on with the job;
(c)For an average job, there would be one to two days of laying the roofing; at that point, NLR would also measure up the flashings for later installation;
(d)NLR would return to the site, usually one to four weeks later when the build had progressed to the necessary point, and the flashings had been manufactured and delivered. This was usually after all cladding and joinery had been installed;
(e)Installing the flashings would usually take more time than laying the roof iron itself, particularly if the installation of the flashings was complicated;
(f)NLR would issue its invoice based on the rates specified in the original job sheet.
[38] Mr Cameron described the overall build as a fairly large one and that the roof was reasonably complicated as it was a large architecturally designed house. He said that NLR spent a day or so laying the iron but did not return for approximately six to eight weeks while the plastering was being completed. When NLR returned to put the cap-flashings on top (a task Mr Cameron described as reasonably complicated), he considered that would have taken a few days at least.
[39] To the best of his recollection, Mr Cameron said NLR would have had a team of at least two or three staff on site most of the time with him “coming and going”. He estimated he would have been on site about a third of the time while the staff were working on it.
[40] Mr Cameron was only advised of any issues with the property when he was contacted by the Council in July 2020.
[41] Mr Davey said that Concept Plastering was contracted to undertake the cladding, cavity, drainage and ventilation work as per BRANZ approved methods and
that this work was also checked and signed off by the building inspector, but he did not know the person who actually did the work.9
[42] Between 31 March 2008 and 30 March 2009, the Council carried out various inspections as the dwelling was being constructed. Nineteen inspection records, one inspection checklist and two inspection memoranda were included in the common bundle of documents, some of which were referred to in evidence. I address the relevant inspection records in relation to the defects to which they are said to relate. None of the building inspectors involved in the relevant inspections were called to give evidence for the Council.
[43] On 22 January 2009, new certificates of title were issued for the two new lots created by the subdivision consent.
[44] On 1 April 2009, the Council issued a code compliance certificate for the relevant building consent and subsequently on 6 April 2009, for the demolition building consent.
[45] On 2 August 2009, Mr Johns entered into an agreement to purchase the property at 896A River Road from Mr Davey. Mr Johns and his partner moved into the dwelling on 31 August 2009.
[46] In 2011, Mr Johns moved to Auckland for a job opportunity and let the property to tenants.
[47] In 2013, another job opportunity arose for Mr Johns in Brisbane. He moved to Brisbane and has lived in Queensland since that time.
[48] In 2014, Mr Johns decided to sell the property as he wished to buy a property in Australia.
[49] In April 2014, a prospective purchaser arranged for a pre-purchase inspection of the house. Mr Johns was made aware that there was a potential issue with the deck
9 Response to notice to answer interrogatories by the Council dated 25 April 2020.
leaking. The prospective purchaser did not proceed with purchase, however Mr Johns decided to investigate the situation. He instructed a company called Betta Inspect It for this purpose.
[50] In July 2014, Betta Inspect It produced a report, which noted water ponding on the deck and concluded that the deck was leaking.
[51] Mr Johns contacted Mr Bell of Bell Builders. He provided Mr Bell with a copy of the Betta Inspect It report and sought advice on what he should do to fix the leaking deck.
[52] In August 2014, Bell Builders provided Mr Johns with an estimate to repair the deck. Mr Bell recommended laying a Kevlar membrane over the existing tiles and adding a further layer of tiles on top of that membrane.
[53] Mr Davey said that Mr Bell also removed and refitted the balustrade fixings and the glass balustrade. He contends that the original balustrades were not poorly installed and were signed off by the Council at the time of installation.
[54] Bell Builders carried out the work in October and November 2014 at a total cost of $21,628.24. Building consent was needed for this work; however, Bell Builders did not tell Mr Johns that he required building consent for it and Mr Johns did not make enquiries himself about the need for building consent.
[55] Mr Johns thought the problem with the leaking deck had now been fixed and got on with life.
[56] In 2016, when he was looking at some of the photographs provided to him by the property management company responsible for tenanting his property, Mr Johns noticed what he thought was mould on a wall in the lounge. He contacted his solicitor. A building surveyor was engaged to inspect the house and Mr Johns applied to the Weathertight Homes Resolution Service (WHRS) for an assessor’s report.
[57] Mr Gilling, the WHRS assessor, completed his report on 17 May 2017. Due to the discovery of water ingress into the internal building elements, Mr Gilling’s
opinion was that a partial re-clad of the house was required, concentrated around the deck.
[58] In about October 2017, Mr Johns contacted Harris Construction (2014) Ltd (Harris Construction) with a view to engaging it to carry out the repairs recommended by the WHRS assessor.
[59] On 18 October 2017, Mr Harris inspected the house. On 20 February 2018, Harris Construction provided an initial quote to complete the remedial work. The quoted price was $154,560.
[60] In preparing its design, Harris Construction identified further areas of concern that had not been covered in the WHRS report. It offered to include remediation of these areas in its quote.
[61] On 24 March 2018, Harris Construction provided an updated quote for the remedial work. The quoted price was $187,701.50.
[62] On 10 May 2018, Harris Construction applied to the Council for a building consent for the remedial work and on 7 June 2018, the Council issued a building consent for it. On 20 July 2018, Mr Johns signed a contract with Harris Construction to carry out this work.
[63] On 18 August 2018, Mr Johns engaged GBC Group Ltd (GBC), a building surveying company with expertise in leaky buildings, to inspect the timber framing and identify timber that either required replacement or treatment with frame saver. Mr Gray, the director of GBC and a former builder and building surveyor, attended the site on eight occasions between December 2016 and October 2018. He gave evidence at the hearing before me.
[64]The remedial work began in early August 2018.
[65] Further defects were discovered during the remedial work. Rather than a partial re-clad, the entire building was re-clad with an increase in both the cost and time needed to complete the remedial work.
[66]The work was completed in February 2019.
[67] On 17 May 2019, Mr Johns sold the property. The problems with the construction of the dwelling and the costs of remediating them have understandably caused Mr Johns considerable distress.
PART THREE: LEGAL PRINCIPLES
[68] The law that applies is not in dispute. However, it is helpful to set out briefly the principles that apply to the claim. This includes the law in relation to the causes of the action in negligence and contribution under s 17 of the Law Reform Act.
The claim in negligence (the Johns proceedings)
[69] To prove a cause of action in negligence, a plaintiff must establish on the balance of probabilities that a defendant owes it a duty of care, that duty of care has been breached, the breach has caused damage, and the damage has resulted in a loss to the plaintiff.
[70] In the defective building context, it is well established that councils and builders owe a duty of care in performing their statutory functions relating to building work. As the Privy Council said in the well-known case of Invercargill City Council v Hamlin:10
In a succession of cases in New Zealand over the last 20 years it has been decided that community standards and expectations demand the imposition of a duty of care on local authorities and builders alike to ensure compliance with local bylaws.
[71] Builders owe a duty to take reasonable care to prevent damage to persons reasonably expected to be affected by their work, including purchasers.11 The scope of this duty is to ensure compliance with the building code,12 good trade practice,13
10 Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC) at 521.
11 Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394 (CA) at 406 and 413; and
Minister of Education v Econicorp Holdings Ltd [2011] NZCA 450, [2012] 1 NZLR 36 at [55].
12 Hotchin v New Zealand Guardian Trust Company Ltd [2016] NZSC 24, [2016] 1 NZLR 906 at [198].
13 Boyd v McGregor HC Auckland CIV-2009-404-5332, 17 February 2010 at [60].
and other relevant statutory requirements.14 The duty cannot be avoided by delegation to subcontractors.15 As Thomas J observed in Body Corporate 346799 v KNZ International Co Ltd, it is akin to a developer’s duty to a purchaser to see that proper care and skill is exercised when constructing a building.16 Developers are jointly liable with independent contractors they engage for all building work undertaken.
[72] Councils also owe a duty of care to building owners when performing their inspection and certification functions under the Building Act.17 As the Supreme Court has recognised, this duty “marches in step” with,18 and is limited to, councils’ statutory functions under the Act.19 All building work must comply with the building code;20 therefore, the duty imposes no higher obligation than the exercise of reasonable care with a view to ensuring compliance with the code.21
[73] In relation to a council’s inspection role, Heath J observed in Body Corporate 188529 v North Shore City Council as follows:22
[183] In carrying out its inspection role, it is plain that the Council ought not to be regarded as a clerk of works or as a project manager. Even before the Building Act was passed, the Council’s duty to third parties was “to exercise reasonable care, not an absolute duty to ensure compliance”. The Council’s role is to provide an appropriate degree of oversight for public policy reasons. Its performance must be judged against the standards of the day and knowledge of the quality (or otherwise) of particular products used in the construction process. It does not take on any responsibility for ensuring, in fact, that all completed work complies with the [Building] Code.
[74] Mr Easton for the plaintiff submitted, and I agree, that the standard of care to be applied is that of a reasonably skilled council at the time, but common industry
14 Findlay (as trustees of the Lee Findlay Family Trust) v Auckland City Council HC Auckland CIV- 2009-404-6497, 16 September 2010 at [33].
15 Mount Albert Borough Council v Johnson [1979] 2 NZLR 234 (CA) at 240–241; and Morton v Douglas Homes Ltd [1984] 2 NZLR 548 (HC) at 592–593, following Callaghan v Robert Ronayne Ltd (1979) 1 NZCPR 98 (SC).
16 Body Corporate 346799 v KNZ International Co Ltd [2017] NZHC 511 at [54]–[55] and [82(a)], citing Mt Albert Borough Council, above n 14, at 240–241.
17 North Shore City Council v Body Corporate 188529 [2010] NZSC 158, [2011] 2 NZLR 298 [Sunset Terraces] at [51]; and Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297 [Spencer on Byron] at [6] and [73]–[97].
18 Spencer on Byron, above n 16, at [71].
19 At [146] and [193].
20 Building Act 2004, s 17.
21 Section 18(1)(a); and Spencer on Byron, above n 6, at [193].
22 Body Corporate 188529 v North Shore City Council [2008] 3 NZLR 479 (HC) (footnotes omitted).
practice is not determinative. The Court is entitled to conclude that the standards of a council at the relevant time fell below the standard required by law.23
[75] Although many of the cases cited to me were decided under the framework of the Building Act 1991, the Supreme Court has signalled that the same principles are likely to apply to work undertaken by councils under the Building Act 2004.24 The most significant difference between the Acts is that under the Building Act 1991, councils had to be satisfied on reasonable grounds that the building work complied with the building code, whereas under the Building Act 2004 the criteria is whether the building work complies with the building consent.25
[76] In Body Corporate 160361 v BC 2004 Ltd and BC 2009 Ltd, Whata J said the obligations under the Building Act 2004 are not materially different from those under the 1991 Act, because:26
(a)The purpose of the Act remains the same, namely to bring about safe and healthy buildings.
(b)The role of building consent authorities is to issue building consents, inspect building work for which it has granted consent, issue notices to fix and issue Code Compliance Certificates.
(c)All building work must comply with the building code to the extent required by the Act, whether or not a building consent is required in respect of building work.
(d)A person must not carry out any building work (including construction, alteration, demolition or removal of a building) except in accordance with a building consent.
(e)Before granting a building consent, the building consent authority must be satisfied on reasonable grounds that the provisions of the building code would be met if the building work were properly completed in accordance with the plans and specifications that accompanied the application for consent.
23 McLaren Maycroft & Co v Fletcher Development Co Ltd [1973] 2 NZLR 100 (CA) at 102 and 108; Body Corporate 90247 v Wellington City Council [2014] NZHC 295 at [157]; and Dicks v Hobson Swan Construction Ltd (in liq) (2006) 7 NZCPR 881 at [76].
24 Spencer on Byron, above n 16, at [217].
25 Section 94(1)(a).
26 Body Corporate 160361 v BC 2004 Ltd and BC 2009 Ltd [2015] NZHC 1803 at [142]–[143] (footnotes omitted).
(f)Every building consent is subject to the condition that the building consent authority is entitled during normal working hours to inspect building work and inspection means taking all reasonable steps to ensure that the building work is being carried out in accordance with the building consent.
(g)The owner of the building must apply for and the building consent authority must issue a Code Compliance Certificate within 20 working days if it is satisfied on reasonable grounds that the building work complies with the building consent.
(h)The building consent authority may issue a notice to fix to a person carrying out or supervising the building work if there are reasonable grounds they are contravening or failing to comply with the Act.
[143] Ultimately however the key issue is whether the Council exercised reasonable care to ensure compliance with the building code and the building consent.
[77]I agree with Whata J’s reasoning and his conclusion as outlined above.
[78] In this case Mr Johns’ claim is framed by the amended statement of claim.27 He has sued the Council as the first defendant and Mr Davey as the second defendant.
[79] Mr Johns alleges that the Council owed him a duty to exercise reasonable skill and care when issuing the building consent, inspecting the work performed under the building consent and issuing the code compliance certificate. The fact that the Council owed such a duty was not disputed by the Council.
[80] The alleged breaches of the Council’s duty were however disputed. Mr Johns alleges that the Council breached its duties by:
(a)issuing the building consent when it did not have reasonable grounds to be satisfied that if the building work was carried out in accordance with the building consent, the provisions of the building code would be complied with;
27 Dated 10 July 2020.
(b)failing to:
(i)identify the defects in the course of its inspections;
(ii)ensure that a sufficient inspection regime was undertaken and/or did not undertake sufficiently thorough inspections so as to ensure that the construction of the dwelling complied with the requirements of the building consent and/or the building code (specifically clauses B2 and E2 of the building code); and
(iii)take steps to ensure that the defects were rectified;
(c)issuing the code compliance certificate when it did not have reasonable grounds to be satisfied that the building work to which the code compliance certificate related complied with the requirements of the building consent and/or the building code; and/or
(d)failing to issue a notice to fix.
[81] Mr Johns does not allege the Council was aware of any defect in the dwelling, and either issued the code compliance certificate or failed to issue a notice to fix regardless. Instead, Mr Johns sought to prove the Council had negligently failed to notice the defects during its inspections. I therefore see Mr Johns’ claims relating to the code compliance certificate and notice to fix as forming part of the same underlying claim; that the Council failed to identify defects in the dwelling during its inspection, and in doing so, failed to exercise reasonable care to ensure compliance with the building code.
[82] As a result of the Council’s breaches, Mr Johns alleges that the dwelling was built with defects, did not comply with the building code and required the repairs he undertook. He claims that his losses are a reasonably foreseeable consequence of the Council’s breaches.
[83] In relation to Mr Davey, Mr Johns alleges negligence by him first as the developer and secondly as the builder:
(a)The claim against Mr Davey as the developer alleges that he owed Mr Johns a non-delegable duty to exercise due skill and care when constructing the dwelling and that this duty was breached because the dwelling was built with defects and was not completed to a proper workmanlike standard or in accordance with clauses B2 or E2 of the building code.
(b)The claim against Mr Davey as the builder alleges that:
(i)He built the dwelling, because he was the project manager overseeing the work of others; and
(ii)It was reasonably foreseeable that a purchaser would rely on him to construct a weathertight dwelling and would be adversely affected if he failed to use due skill and care when constructing the dwelling; and
(iii)He owed a duty to Mr Johns to exercise reasonable skill and care to ensure that the agreed work was done in accordance with the building code.
[84] Mr Davey accepts that he was a developer of the property and that he had a duty to exercise skill and care when constructing the dwelling both as the developer and the builder. As with the Council, the focus of his argument was on whether that duty of care was breached and whether the defects alleged in fact occurred or required the extent of the repairs that were undertaken.
The claim under the Law Reform Act (the Council’s proceedings)
[85]The relevant parts of s 17 of the Law Reform Act provide:
17Proceedings against, and contribution between, joint and several tortfeasors
(1)Where damage is suffered by any person as a result of a tort (whether a crime or not)—
(a)judgment recovered against any tortfeasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tortfeasor in respect of the same damage:
(b)if more than one action is brought in respect of that damage by or on behalf of the person by whom it was suffered, or for the benefit of the estate, or of the wife, husband, [civil union partner, de facto partner,] parent, or child of that person, against tortfeasors liable in respect of the damage (whether as joint tortfeasors or otherwise), the sums recoverable under the judgments given in those actions by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgment first given; and in any of those actions, other than that in which judgment is first given, the plaintiff shall not be entitled to costs unless the Court is of opinion that there was reasonable ground for bringing the action:
(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued [in time] have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.
…
(2)In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the Court to be just and equitable having regard to the extent of that person's responsibility for the damage; and the Court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.
…
[86] Those involved in building work are considered concurrent tortfeasors for the purposes of s 17 of the Law Reform Act where they cause or contribute to damage to a property.28 If the damage is caused by the discrete negligence of one tortfeasor, then
28 Stephen Todd (ed) Todd on Torts (8th ed, Thomson Reuters, Wellington, 2019).
they alone bear the responsibility for that damage. Where there is more than one party responsible for a defect causing damage, then liability between the parties for the loss is apportioned according to what is just and equitable.29
PART FOUR: THE ALLEGED DEFECTS
Overview
[87] The seven defects alleged are set out above. The evidence of Mr Johns and the Council’s witnesses relate to all the defects, because Mr Johns’ claim is that the Council is liable for all seven defects. However, the Council contends that if it is liable for anything, it should only be for Defect 2.
[88]The witnesses for Mr Johns were:
(a)Mr Harris, the builder who undertook the remedial work;
(b)Mr Gray, the registered building surveyor who gave evidence following his inspection of the building while the remedial work was being undertaken by Harris Builders; and
(c)Dr Robin Wakeling, a biodeterioration consultant.
[89]For the Council, the witnesses were:
(a)Mr Hunt, a building surveyor and quantity surveyor; and
(b)Mr Hutt, a principal building official employed by the Christchurch City Council.
[90] In the main, this evidence will be analysed in the context of the defects to which it relates; however, there were some general challenges to the evidence of Mr Gray, Mr Hunt and Mr Hutt which I address shortly.
29 Law Reform Act, s 17(2).
[91] Mr Davey’s evidence addressed which subcontractor he said was liable for each of the alleged defects. The theme of his evidence was that those who undertook the work were responsible for it, not him.
[92] The evidence for ECDL was given by Mr Stewart and Mr Gujer. The case for ECDL is if it is liable at all, it is only in relation to Defects 1 to 5, as its work on the deck was limited to the installation of a first layer of building paper. Any personal liability for Mr Stewart and Mr Gujer is denied, however they both carried out the building work for ECDL.
[93] The evidence for NLR was given by Mr Cameron. If NLR is liable at all, it says it is only liable in relation to Defects 3 to 5, those associated with the roofing work. Any personal liability for Mr Cameron is denied, as he was not “on the tools”, and in fact was rarely on site, the role of team leader being carried out by an employee.
[94] As mentioned above, Mr Bell did not advance his case during the hearing. The evidence he had filed beforehand was therefore not formally introduced as evidence at the hearing. It was common ground that any liability for Mr Bell relates only to Defects 6 and 7. The Council did not advance any separate case against Bell Builders in its evidence or submissions.
The expert evidence generally
[95] Mr Robertson for the Council included a section in his closing submissions addressing the topic of expert evidence. Even though Mr Gray was the only expert who inspected the building in person (apart from Mr Harris, the builder who undertook the remedial work), Mr Robertson submitted that I should prefer the evidence of Mr Hutt and Mr Hunt over that given by Mr Gray because:
(a)Mr Gray is not an expert in relation to Council practices whereas Mr Hutt is such an expert (a qualification/ admissibility issue);
(b)Mr Gray applied the wrong legal test because his analysis was based on what a “prudent” rather than a “reasonable” Council officer ought to have done (a reliability/weight issue);
(c)the practices Mr Gray employed to establish the causes of water ingress were not sufficiently robust (a reliability/weight issue).
[96] In addition, I was asked to contrast Mr Gray’s assessment and identification of the seven defects with defects identified in the WHRS Report. The report identifies four defects, only one of which is referred to in this proceeding: Defect 5. Mr Robertson submitted that if a trained WHRS inspector could only identify one of the seven defects claimed, it would have been significantly more difficult for a building inspector on site to do so.
[97] Although the WHRS inspector would have had more training than a building inspector in weathertightness issues, it must be remembered that the role of a WHRS inspector involves a retrospective assessment of work undertaken, whereas the role of a building inspector is prospective in the sense that it involves checking work being undertaken in a current environment. In 2008, building inspectors were aware of the need to take care to inspect building elements that had the potential to impact on the weathertightness of a building, a point accepted by Mr Hutt, who said:
There was a great deal of training which was underway throughout the country being provided by building officials, DBH, Department of Building and Housing and BRANZ. I can certainly say in Christchurch all council officers attended that sort of training. A lot of [this training] focused on what the critical issues that had gone wrong such as direct fix claddings which were problematic, enclosed balconies which didn't have relied on scuppers and drains in the floors to – for water to escape. Top fixings of balustrades were a particular problem, top, flat tops to any 15 parapets were a problem and plastered top to parapets were problematic… The building inspectors were better able to identify what were those higher risk areas which had proven to fail.
Generic expert evidence about council practices
[98] Section 25 of the Evidence Act 2006 governs the admissibility of expert opinion evidence. Subsections (1) to (3) relevantly provide:
(1)An opinion by an expert that is part of expert evidence offered in a proceeding is admissible if the fact-finder is likely to obtain substantial help from the opinion in understanding other evidence in the proceeding or in ascertaining any fact that is of consequence to the determination of the proceeding.
(2)An opinion by an expert is not inadmissible simply because it is about—
(a)an ultimate issue to be determined in a proceeding; or
(b)a matter of common knowledge.
(3)If an opinion by an expert is based on a fact that is outside the general body of knowledge that makes up the expertise of the expert, the opinion may be relied on by the fact-finder only if that fact is or will be proved or judicially noticed in the proceeding.
[99] Given that this case is about alleged building defects that are said to have caused weathertightness issues, expert opinion evidence about some of the matters in contention could be substantially helpful. For example, an opinion about how building elements should be constructed to accord with good trade practice would be a legitimate area of expertise from which the Court could obtain substantial help, especially if, as here, the case involves allegations of less than satisfactory trade practice.
[100] Less clear, however, is how general evidence about council practices in relation to the approval of building consents, inspections and the issuing of code compliance certificates qualifies as a topic properly addressed by expert opinion, particularly if, as here, there is little evidence to support the proposition that practices across territorial authorities for approving building consents, recording and undertaking inspections and issuing code compliance certificates were the same or substantially similar at the time the building was constructed in 2008 and 2009. This is especially so given that the test for assessing whether a council practice is reasonable or not is an objective one.
[101] But even if such general evidence can be given, what is more significant is what actually happened, and the best evidence of that is the evidence of those who approved the consent, undertook the inspections and/or approved the code compliance certificate. As I have already outlined, such evidence was not called by the Council in this case. Rather, the evidence of Mr Hutt, who is employed by the Christchurch City Council as a principal building official and has been employed by it in various roles as a building official since 1993, was called to give generic opinion evidence
about the practices of the Hamilton City Council based on his desktop review of the documentation.
[102] There was no challenge to the admissibility of Mr Hutt’s evidence on the basis I have outlined above, nor was his evidence analysed in terms of the “substantially helpful” test. I assess therefore the weight I ought to give to Mr Hutt’s evidence in relation to each defect, where it is relevant.
[103] With those general comments in mind, I now turn to the specific challenges to Mr Gray’s evidence.
Specific challenge to Mr Gray’s expertise about council practices
[104] Mr Robertson challenged Mr Gray’s evidence about council practices on the basis that he lacked the relevant qualifications and expertise to give such evidence. Mr Robertson submitted that the limited time (two years) Mr Gray spent as a trouble- shooter for the North Shore City Council with specific expertise in weathertightness did not qualify him to give evidence about the practices of reasonable council officers throughout New Zealand when issuing building consents, undertaking inspections during a build and issuing code compliance certificates. Mr Robertson highlighted Mr Gray’s evidence that he did not go to any national conferences organised by the Building Officials Institute of New Zealand (BOINZ), the professional body for building inspectors.
[105] Mr Gray’s evidence differs from Mr Hutt’s because he inspected the dwelling on eight occasions while it was being repaired by Mr Harris. He is also a builder and a building surveyor. Because of what he saw during his inspections, Mr Gray can in my view say which defects might have been prevented by better details being required in the building consent and more thorough inspections being undertaken. In addition, Mr Gray’s experience between 2006 and 2008 as a Territorial Authority Building Inspections Officer – Weathertightness Specialist for the North Shore City Council did in my view assist him to understand where councils have failed to identify weathertightness issues, be they matters associated with insufficient design details in a building consent, building consent design standards not being followed, or inspections not identifying problems when they could have done so. And his
experience in this role was just prior to and overlapped with the start of the construction of this building, which supports the contention that weathertightness issues were very much a live issue at that time for building inspectors. However, the difficulty I have identified above in relation to Mr Hutt’s evidence may also apply to any opinions expressed by Mr Gray about the issuing of a code compliance certificate given this was a desktop exercise and practices may differ between councils.
[106] In the end, I have decided that Mr Robertson’s challenge to Mr Gray’s evidence is best dealt with as an issue of weight if it arises, rather than as an issue of admissibility. And to reiterate, there is the more fundamental problem of whether opinions about generic council practices are substantially helpful in any event in the absence of a foundation about common understanding amongst councils about what constitutes best practice.
Was the wrong test applied by Mr Gray?
[107] The argument here is that Mr Gray confused the test that applies by referring to a “prudent” council officer rather than a “reasonable” council officer and at times, he referred to both concepts together. Mr Robertson questioned Mr Gray about this, asking him to explain what his expectation of a prudent building inspector would be. Mr Gray’s response was that “I would interpret a prudent building inspector as being somebody that is considered and careful in their approach”.30
[108] Mr Robertson submitted that the standard Mr Gray adopted using the term “prudent” pitches the standard too high. He referred to a dictionary meaning of “prudent”, but no reference was given to the dictionary used which was quoted as follows:
Definition of prudent:
characterized by, arising from, or showing prudence: such as a: marked by wisdom or judiciousness (prudent advice)
b: shrewd in the management of practical affairs (prudent investors)
30 Transcript p 152 at line 29.
[109] Section 90(3) of the Building Act 2004 sets the standard required by defining the term “inspection” as “the taking of all reasonable steps to ensure that building work is being carried out in accordance with a building consent”.
[110] The standard of a reasonable inspector has been referred to in many of the decisions dealing with leaky buildings and is set out above. Ronald Young J addressed this in Body Corporate 90247 v Wellington City Council when he said in relation to the standard to be adopted by building inspectors:31
[156] I accept, in part, the Council’s criticism of his evidence. Mr Wutzler sets a “gold” standard in the identification of building trouble spots. Mr Wutzler’s expectation of what a competent building inspector should see is, I consider, set at his own standard of knowledge of leaky buildings in 2013. Council building inspectors could not be expected to have reached this advanced level of knowledge in 2000/2001. Any assessment of what a building inspector could be expected to identify has to be tempered by taking into account reasonable standards of the day. I stress the word “reasonable”.
[157] However, it is not enough for an inspector to simply say “that’s how we did it in those days”. If what the inspectors were doing was inadequate, judged by a reasonable standard of the day, then it is no excuse to simply say “that’s how we did it then”. There was a significant element of this approach in Mr Tait’s evidence as to his inspections of the building work.
[111] As well, in relation to a code compliance certificate, s 94 of the Building Act provides:
94Matters for consideration by building consent authority in deciding issue of code compliance certificate
(1)A building consent authority must issue a code compliance certificate if it is satisfied, on reasonable grounds, —
(a)that the building work complies with the building consent; and
(b)that, —
(i)in a case where a compliance schedule is required as a result of the building work, the specified systems in the building are capable of performing to the performance standards set out in the building consent; or
(ii)in a case where an amendment to an existing compliance schedule is required as a result of the building work, the specified systems that are being
31 Body Corporate 90247 v Wellington City Council, above n 2.
altered in, or added to, the building in the course of the building work are capable of performing to the performance standards set out in the building consent.
[112] I am not persuaded that Mr Gray’s understanding of “prudent” meant that he applied a higher test than that required by the legislation. In my view, a building inspector who undertakes their inspections, a careful and considered manner is taking all reasonable steps to ensure that building work is being carried out in accordance with the building consent. This is a factual assessment. I agree with Ronald Young J that what a building inspector could be expected to identify has to be tempered by taking into account the reasonable standards of the day bearing in mind that this in itself must be approached objectively.32 Where Mr Gray referred to “prudent” in his evidence, I use the word “reasonable”.
Methodology challenges to Mr Gray’s evidence
[113] The evidence of Mr Gray’s methodology in undertaking his investigation was also challenged in respect of some of the alleged defects, specifically that he did not take moisture readings or apply dye tests correctly in some instances. It was also contended that some of the photographs he took to record what he saw during the re- clad did not show the damage he alleged had occurred. As a result, Mr Robertson submitted that Mr Gray’s opinions about the causes of water ingress in relation to certain defects were not sufficiently robust to be reliable and should therefore be given little weight, if any.
[114] The most logical approach is to deal with these challenges where they arise in relation to an alleged defect, however in my view overall the methodology employed by Mr Gray was sound. Mr Gray also had the undoubted benefit of undertaking physical inspections of the building while it was being repaired and I am satisfied that his opinions were not only based on the photographic record, but on what he saw during his inspections. Mr Gray was accompanied by Mr Harris, whose evidence confirmed, in a broad sense, Mr Gray’s observations on the extent of remedial work necessary.
32 Body Corporate 90247 v Wellington City Council, above n 20.
General observations about expert evidence
[115] I raised one other matter of concern. This is a case where it became abundantly evident during the hearing that expert conferencing had not occurred. While this is often undertaken when directed, there is nothing to prevent it occurring on a voluntary basis. It would have been extremely helpful to the Court for the experts to have agreed on the facts that were not in issue and those that were and for them to have articulated their opinion with reference to the facts that underpin them. This exercise ought to have been undertaken prior to the filing of evidence to be most useful. For example, the dispute between the experts about the application of sealant or the debate that evolved during the hearing about rivets could well have been appropriately addressed during conferencing.
The defects generally
[116] It was accepted that water had entered the internal building elements and caused damage to them. Where this occurred, how extensive the damage was and who was responsible for the damage was contested.
[117] Although the evidence was not structured in this way, there are four principal ways in which water is said to have entered the internal building elements. They are:
(a)water ingress through the top of the building from the roof parapet flashings and rivets (Defects 3-5);
(b)water ingress through the deck from the deck membrane to wall upstands and the balustrade fixings (Defects 6 and 7);
(c)water ingress around the windows (Defect 1); and
(d)a lack of ventilation/drainage at the top and bottom of the building (Defect 2).
[118] I now analyse the evidence in relation to each of the alleged defects, under these headings.
Water ingress through the top of the building (Defects 3-5)
[119] It is alleged that as a result of poor workmanship water was able to enter the internal building elements through the top of the building. Defect 3 focuses on the metal parapet cap flashing junctions; Defect 4 focuses on the rivets used to bind together the metal cap flashings which it is claimed were not sealed or flashed appropriately, and Defect 5 concerns the parapet to wall junctions known as saddle flashing junctions. The areas concerned include the roof pergola and the balustrades.
[120] Although Defects 3 – 5 are considered separately, I also consider them in the round after each separate analysis has been undertaken, given that they all relate to the same point of entry into the internal building elements. To do otherwise would be to risk undertaking “a slice and dice” or siloed approach which may not be appropriate. Having said this, I accept that care must be taken to ensure that liability for any defect is not thereby wrongly attributed to a party that is not responsible for it.
[121] In terms of potential liability, the alleged defects concern the Council, Mr Davey, NLR, Mr Cameron, Westgate, ECDL, Mr Stewart, Mr Gujer, Concept Plastering and Mr Richardson.
Defect 3: poorly formed roof metal parapet cap flashing junctions (unsealed gaps, laps not fully sealed, no under-flashings)
[122] This defect relates to water entry through the top of the dwelling from the metal cap flashings installed on the roof pergola and the top of the balustrade. It is alleged that these were poorly formed creating a pathway for water to enter the internal building elements.
[123] Page A01 of the consented plans provides that “all construction is to be in accordance with NZS3604:1999 and the related documents in the New Zealand Building Code, including E2 AS1 Feb 2005.” Acceptable Solution E2/AS1 specifies ways in which metal cap flashings should be installed and made waterproof. The consented plans, however, do not show how different sections of the cap flashings were to be joined or waterproofed where they met in straight lengths or at corners. Mr Johns’ case was that they ought to have.
[124] Mr Gray identified the following deficiencies with the installation of the cap flashings:
(a)there were unsealed holes at the inside and outside corners where two lengths of flashing overlapped;
(b)there were no underflashings at external corners; and
(c)sealant did not extend the full width of the flashing.
[125] Both experts agreed that water had made its way through the cap flashings and caused damage to the timber framing and linings, and the photographs produced in evidence clearly show decay on the timber framing under the cap flashings.33 It was accepted that the water damage was evident above and adjacent to the windows.
[126] The consensus of the experts was that the damage caused by this defect justified a complete re-clad.
[127] Mr Gray’s evidence was that the work necessary to repair this defect involved removing cladding to all elevations; joinery; deck membranes and balustrades, and all cap flashings, then remediating the timber frame, reinstating refurbished joinery, installing new deck membranes, reinstating balustrades and installing new cladding and flashings.
[128] Mr Hunt’s evidence was that the remedial work necessary to remedy the defects required the removal and replacement of all metal cap roof/parapet flashings, damaged or decayed framing and damaged linings; and that frame saver was then required to be applied to the remaining timber framing and new cap flashings were required to be installed.
[129] In relation to this defect, I am not persuaded that in fact Mr Gray and Mr Hunt were that far apart given that they agree that the damage caused by the roof details are so extensive that this of itself would be a reason to re-clad the building. The difference
33 CBD Volume 5 tab 189 photo 78/106, 110 and 111.
appears to be that Mr Gray has included reference to the deck membranes and the balustrades under this defect whereas Mr Hunt has dealt with it under Defects 6 and 7.
Who is liable?
[130] The Council and Mr Davey are the defendants Mr Johns claims are liable for this defect. Westgate was joined as a third party by Mr Davey and sued as joint tortfeasor in the Council’s proceedings. Westgate took no steps to defend its position at any point in the proceedings.
[131] In relation to NLR, its liability only arises in the context of the Council’s proceeding if the Council is found to be liable. Mr Cameron’s liability also arises in relation to the Council’s proceedings, because he is a director of NLR, however, the Council’s case against him was not articulated in a way that separated it from its argument in relation to NLR. Mr Davey has not joined NLR as a third party and NLR has not cross-claimed against Westgate.
[132] NLR accepts that it undertook the work relating to this alleged defect. Its evidence was however that it was not directed to install underflashings, its workmanship was generally consistent with industry practice and in relation to sealant, the photographs show widespread silicone use. Further, NLR submits that if there were shortcomings in relation to the flashings, these should have been identified by Mr Davey as project manager, Westgate as head roofing contractor and the Council during its inspections.
[133] I now address the parties’ liability for each of the areas identified by Mr Gray as contributing to this alleged defect.
Lack of underflashings
[134] As outlined above, the consented plans do not show how different sections of cap flashings were to be joined or waterproofed where they met in straight lengths or at corners. While the plans referenced E2/AS 1 2005, Mr Gray’s opinion was that the details contained within the Acceptable Solution ought to have been incorporated in the consented plans so that the builders could correctly construct the dwelling. In his
opinion, a reasonable council would have required specific details showing how the cap flashing was to be joined and installed at each junction and refused to issue a building consent without that information.
[135] Further, Mr Easton submitted that Mr Gray’s opinion was consistent with BRANZ Bulletin 505 2008 “Acceptable Plans and Specifications” which states:34
It is not acceptable to simply reference a standard or Acceptable Solution or cite manufacturer’s recommendations in a non-specific way as all these sources contain options for construction. Specific selection of the option to be used must be made. Quoting a standard or Acceptable Solution or leaving the builder to interpret the requirements (as is often done with NZS3604) is not acceptable.
[136] Although the BRANZ Bulletin advice post-dated the start of the build, it nonetheless identifies an issue which must have been prevalent at the time.
[137] Mr Johns’ case was that given the high risk of failure of poorly designed or constructed parapet flashings, the Council could not have been reasonably satisfied that the roof metal cap flashings would comply with the building code if built in accordance with the consented documents and it therefore ought not to have issued a building consent.
[138] Mr Hutt said that it was unfortunate that not all details had been fully outlined in the plans, especially the intersections between the different claddings, however, his opinion was that where such details had been omitted, reference to E2/AS 1 was sufficient. He said building officials are not required to make such a “forensic assessment” of consent plans.
[139]Despite this, in cross-examination, Mr Hutt accepted:
(a)There were no details in the consented plans to show how the cap flashings at external corners were to be folded, lapped or waterproofed;
(b)There was no detail showing how the underflashings were to be installed at the corners;
34 Common Bundle 304.00129.
(c)Parapets are considered to be more high-risk than a roof with eaves;
(d)The Council’s own building consent checklist contains a prompt to the Council officer processing the building consent application to check whether the parapets, enclosed deck barrier junctions and flashings had been detailed on the building consent plans.
[140] I am persuaded that the plans ought to have included more specific details about how different sections of the cap flashings were to be joined or waterproofed where they met in straight lengths or at corners. The Council breached its duty of care by failing to do this.
[141] Mr Davey said that he would have passed the roofing plans on to Westgate, however Mr Cameron for NLR said that he had never received complete plans from Westgate, and he had extremely limited (if any) interaction with Mr Davey, a matter Mr Davey also confirmed in his evidence.
[142] I accept NLR’s evidence that it was not directed to install underflashings, however, prior to installing the metal cap flashings, the lack of underflashings would have been obvious to it. In addition, if the plans were not clear or non-existent, NLR, in my view, had an obligation to ask Westgate about what was required. Westgate also had a duty to ensure its contractor NLR knew how the cap flashings were to be joined and waterproofed at corners or in a straight line. There is no evidence that this was done.
[143] The lack of detail in the plans coupled with the various layers of sub-contract involved in this aspect of the build reveal how easily an issue such as this can fall between the cracks. It reinforces why a more specific detail should have been included in the consented plans. As well, and regardless of whether the plans ought to have included further details, Mr Davey as the developer and overall project managing builder had a duty to ensure that his subcontractors were responsible for the underflashings. Westgate also had a duty to address the underflashings issue and to outline to its subcontractor NLR how sections of cap flashings were to be joined or waterproofed at corners or in a straight line and to ensure that this in fact had occurred.
[144] I find all of these parties (Mr Davey, Westgate and NLR) liable for the lack of underflashings and the Council liable as outlined above, for failing to ensure the necessary detail was provided in the plans.
Workmanship
[145] It was agreed that the general workmanship undertaken by NLR was sound, however, as NLR accepted, the obvious exception was the corner joint in location 1 photo 16. This photo depicted a hole inside the corner of the cap flashing situated above the garage and was the subject of comment by all experts. Mr Gray’s opinion was that a Council inspector ought to have noticed the defect and if he/she had, this would have resulted in the cap flashing being rectified and the remaining cap flashings being inspected to ensure the building was weathertight before the internal linings were installed.
[146] Mr Gray’s evidence was that the Council had a number of ways of checking the construction of the parapets. These included:
(a)requesting one of each junction to be deconstructed to allow inspection;
(b)asking the contractor to confirm that underflashings were installed;
(c)feeling or visually inspecting under the cap flashing for underflashings; and
(d)inspecting the folders in the flashing and identifying the pin holes at the corners and if necessary, inserting a sharp object to check whether another flashing was underneath.
[147] Mr Gray’s opinion was that a reasonable council would have identified all of the cap flashing defects (with the exception of the lack of sealant) at the final building inspection on 23 April 2009.35
35 Common Bundle 308.01138.
[148] Mr Hutt noted that inspecting roof details is a challenge for building inspectors. His opinion, however, was that a reasonable inspector was entitled to take a “representative sample”; in other words, if one flashing was inspected and found to be appropriately installed, it would not have been necessary to check all of them. This is because, Mr Hutt said, an inspector would have difficulty accessing flashings such as the one shown in photo 16 because of health and safety concerns. He referred to ladder access to the roof as well the risk of potentially damaging the roof during a close inspection as barriers to such an inspection.
[149] The experts gave their opinions about whether access to this roof would have been problematic for a Council inspector. The questioning focused on photo 16, a location that could be seen from the deck of the property about six metres away from the junction depicted in the photo. Mr Hutt initially said that it was reasonable for a Council inspector to stand on the deck and inspect the corner from six metres away, but later was not sure whether it would have been visible from this distance. Mr Hutt nonetheless took the view that it was reasonable for a Council officer to take a representative approach to all of the junctions, so that if the hole has not been visible and another junction had been inspected, which proved to be satisfactory, that would be sufficient. The difficulty with this opinion, however, is that there is no evidence from any inspector to say what was done to check any of the junctions. There is therefore a gap in the evidence. I am not able to infer that in fact the “representative sample” approach was taken in this case.
[150] In relation to the health and safety point, Mr Hutt also conceded that under s 223 of the Building Act, a Council inspector was able to request safe access to the roof at any point and he also conceded that there may have been scaffolding on the site in any event which would enable an inspector could to gain safe access to the roof. In fact, Mr Cameron’s evidence was that when NLR was working on the roof, it was fully scaffolded and an inspector could have taken the opportunity to inspect the flashings then. Again, the difficulty with Mr Hutt’s opinion evidence about health and safety matters is that there is no evidence from any inspector to say how the various inspections were in fact undertaken and whether there were in fact health and safety concerns.
[151] Mr Hutt also suggested that the Council was entitled to expect that the building work was built in accordance with the consent. I have already identified the difficulties with the plans but in any event Mr Easton rightly referred to s 90 of the Act which requires the Council to be reasonably satisfied that the building work was carried out in accordance with the consent.
[152] Mr Hutt also conceded that the critical elements of a cap flashing design such as an underflashing or a soaker would not have been difficult to check once fully constructed, and as the High Court acknowledged in Sunset Terraces,36 a council can require work to be deconstructed if it is necessary to see how it had been constructed. There is no evidence that this in fact occurred.
[323] I accept that there is no evidence that the holes at the bottom of the brick course permitted water to pond at the bottom of the wall. Clearly the complaint is that the size of the holes did not comply with the consented requirements and because some were sealed over, this meant that there was insufficient ventilation to prevent a build- up of moisture inside the walls.
[324] Mr Hunt considered that cap flashings would provide some ventilation where they lap, and that gaps under the windows would also allow some ventilation (which would be reduced if the gaps were sealed), however, he considered that while the lack of ventilation may have exacerbated the problem, once the water ran down from the roof, this would not have been prevented by having larger holes either at the top of the walls or at the bottom. In other words, as Mr Robertson submitted, there is no evidence that the inadequate ventilation of itself caused the damage.
[325] In my view, the evidence establishes that this defect contributed to the damage to the internal building elements. It not necessary in my view for this defect in isolation to have caused the damage or for it to have been the primary cause of it. It is enough that it has or is likely to have contributed to the damage to the building. I find this to be the case, even if it was to a minimal degree.
What remedial work was required?
[326] Mr Gray’s evidence was that the lack of drainage and ventilation necessitated all the remedial work to the building. Mr Hunt did not agree. He said the remedial work would be limited to installing new ventilation at both the base and the top of the brick veneer cavity.
[327]Mr Easton submitted that Mr Hunt’s evidence on this point overlooked that:
(a)There was a lack of adequate drainage or any ventilation at the top of the brick veneer for approximately nine years before the remedial work commenced; and
(b)The lack of drainage and ventilation had contributed to mould growth, decay to the timber frame, a matter which Mr Hunt had acknowledged in this evidence.
[328] Mr Robertson referred to the WHRS assessor’s report which did not list inadequate ventilation as a defect requiring separate repair, but only referred to it as a factor to be considered generally.
[329] In my view, although this defect of itself did not require a complete re-clad of the home, it was nonetheless an important contributor to the need for the re-clad to occur. Given that this defect was in situ for nine years, in my view it is more probable than not that the lack of ventilation and inadequate drainage contributed in some way to mould growth and decay to the timber frame.
Who is liable?
[330] In my view, Mr Davey is liable for this defect both as developer and as the project managing builder, however I am also satisfied that Concept Plastering was directly responsible for this part of the build. To the extent Mr Davey is liable for this defect, his third party claim against Concept Plastering succeeds.
[331] I find that the Council is also liable for this defect. Work was not done in accordance with the building consent and this ought to have been identified during an inspection. The final building inspection checklist included a specific tick box titled “Brick veneer weep and ventilation holes”. This has been ticked by both the inspector and Mr Davey. If a proper inspection had been undertaken, this aspect would not have been effectively signed off by the inspector, which in turn would have impacted on the code compliance certificate being issued.
[332] The Council joined Concept Plastering and Mr Richardson as the defendants in its proceedings. The case against Mr Richardson personally was however not advanced in any significant way by the Council. I have found that Concept Plastering was primarily responsible for the creation of the defect. The case against the Council is based on its failure to independently ensure via its inspections that this aspect of the build had been properly completed. In my view, it failed in its duty to do this.
Conclusion re: defects Liability of directors
[333] Mr Cameron was personally named as a defendant in the Council’s proceedings. Directors of construction companies may also have a duty of care in relation to their companies’ actions, where they exercise a sufficient “degree of control” over the acts and omissions said to form a breach of the duty.66 Such control was found by Doogue J in Davies v K M Smith Builder Ltd:67
… Mr Smith was very closely involved in the project management of the construction. Mr Smith held responsibilities for management of all aspects of the build, including contract management, cost management, programme management, site management, health and safety provisions and legal compliance. He was plainly responsible for overseeing the general procurement of materials and assignment of labour. He did all the liaison with the subcontractors. He was integrally involved in the interpretation, amendment and elaboration of Mr Scaife's plans, including making his own custom-made innovations.
66 Stephens v Barron [2014] NZCA 82, (2014) 21 PRNZ 734 at [30].
67 Davies v K M Smith Builder Ltd [2021] NZHC 2865 at [156].
[334] In Hsu v Mahoney a duty of care arose after a director told purchasers he would fix a defect, then assured them it had been fixed and they could move into the property.68
[335] I am not satisfied that the Council’s case against Mr Cameron personally has been established. The evidence establishes that Mr Cameron was onsite approximately 30 per cent of the time when NLR was undertaking the work, that there was a team leader employee onsite and that when Mr Cameron was on the site, he was not on the tools. It is therefore arguable that he did not have the level of personal involvement that justifies personal liability. In other words, this is not similar to cases where builders have been found to owe an individual duty of care to an owner in addition to the duty of care owed by their company.
[336] I agree with Mr Shore that the need to protect plaintiffs from defendants who avoided liability in payment by winding up their trading entity has been a relevant policy consideration.69 The evidence establishes that NLR has been incorporated for 14 years and continues to trade responsibly and prudently. I agree with Mr Shore’s submission that this is not a situation where deliberate steps have been taken by a company director to limit their liability or to avoid the company entity having any value.
[337] I find therefore that while liability attaches to NLR, it has not been established in relation to Mr Cameron personally.
[338] There is not much evidence of what aspects of the build Mr Gujer and Mr Stewart individually had control over, however, both admitted to having installed the saddle flashings and both worked together on the house. They appeared to have shared control over ECDL; in my view, it is proper to infer that they exercised joint control. For this reason, in relation to the saddle flashings (Defect 5) and my findings against ECDL in relation to Defect 6, I also consider them to be personally liable.
68 Hsu v Mahoney [2021] NZHC 1611 at [209]–[213].
69 Trevor Ivory Ltd v Anderson [1992] 2 NZLR 517; Morton v Douglas Homes Ltd [1984] 2 NZLR 548; Callaghan v Robert Ronayne Ltd (1979) 1 NZCPR 98 and Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324.
Overall assessment of defects
[339] I now consider the defects in the round. In my view, the defects concerning the roof (Defects 3 – 5) are the most significant defects which of themselves justified a complete re-clad of the building. In relation to the remaining defects I found to be proven, they have in my view all contributed to the damage to the internal elements of the building at the time.
[340]In summary, in terms of liability I have found:
(a)Mr Johns succeeds in his claim against the Council in respect of all defects in relation to its duty to inspect but only in part in relation to Defect 3. Mr Johns also succeeds in his claim against the Council for Defect 1, part of Defect 3 and Defect 7 relating to its duties when issuing the building consent.
(b)Mr Johns’ claim succeeds against Mr Davey in relation to all defects, but only in part in relation to Defects 3.
(c)Mr Davey’s third party claim succeeds against ECDL, Westgate, Concept Plastering, Hamish John Stewart, Daniel Gujer and Mr Bell, to the extent outlined in this judgment.
(d)The Council’s claim succeeds against ECDL, Westgate, Concept Plastering, Hamish John Stewart, Daniel Gujer, Mr Bell, and NLR to the extent outlined in this judgment.
PART 5: QUANTUM AND APPORTIONMENT
[341] I now turn to consider the evidence and issues relating to quantum and apportionment.
Quantum
[342]Before any concessions were made, Mr Johns claimed the following:
(a)reimbursement for actual losses incurred amounting to $688,419.39;
(b)interest to be calculated from when each relevant expense was paid by Mr Johns to when the judgment sum is paid; and
(c)general damages of $25,000.00 for stress and inconvenience.
Losses
[343] By the end of the hearing certain deductions that had been signalled by the Council (via Mr Hunt) as being inappropriately included in the claim were accepted. It was agreed that these deductions reduce Mr Johns’ claim to one of $633,996.62.
[344] Mr Johns disputes the seven remaining deductions which Mr Hunt contended should be deducted from the claim. The evidence about this came from Mr Harris who undertook the remedial work for Mr Johns and from Mr Hunt. I deal with each deduction in turn.
VO8—$8,643.65 including GST (scaffolding and shrink wrap)
[345] Mr Hunt said that Mr Johns had been charged a 12 per cent margin for scaffolding and shrink wrap, however, Mr Harris who priced and undertook the remedial work said he gave Mr Johns a discount by removing 12 per cent of the contractor’s margin. Mr Harris was not cross-examined about this.
[346]I accept Mr Harris’ evidence. This deduction is not justified.
VO26—$16,031.18 including GST (removing parapets and installing small soffits)
[347] Mr Hunt’s evidence was that the roof design was improved when the original roof parapets were removed, and small soffits were installed.
[348] Mr Harris explained the reason why this change was made in this evidence. When pricing the remedial work, he said that he compared the cost of a “like for like” replacement against the cost of removing the roof parapet. He found the latter option to be $4,000 cheaper because it did not require the decayed timber on the parapets to be replaced. Mr Gray agreed with this.
[349] Whether or not the roof design was improved is not a matter I need to determine. The evidence is clear that the work done by Mr Harris was cheaper than a complete “like for like” replacement. I accept therefore that $4,000 should be offset against the deductions already accepted by Mr Johns as being appropriate, which takes the total to $50,422.77 including GST rather than $54,422.77.
VO27—$1,344.52 including GST (replace garage door lining)
[350] Mr Hunt’s evidence initially was that the garage door lining replacement was for either aesthetic or thermal reasons and was therefore unrelated to the weathertightness defects. Mr Harris’ evidence was that the garage door lining had to be replaced to access and replace the decayed timber framing surrounding the garage door that had been identified by Mr Gray. In cross-examination however, Mr Hunt accepted Mr Gray’s explanation, and Mr Robertson in closing no longer claimed it as an inappropriate deduction.
[351]I accept that this expense is an appropriate cost to be claimed.
Toilets
[352] Mr Hunt’s evidence was that this item was not related to the weathertightness defects, which is correct. The replacement cost for this item was $1,000 and therefore any deduction should be for this amount only.
[353] Regardless of this I am not satisfied this is work directly attributable to weathertightness and there should be no deduction for it.
VO51—$3,787.02 including GST (work to tile the deck)
[354] Mr Hunt’s evidence was that this work was a consequence of removing the unconsented Kevlar and the second layer of tiling done by Mr Bell on the deck.
[355] For the reasons outlined in relation to Defect 6, I find this is an appropriate deduction.
VO51—$12,579.95 including GST (repainting the exterior)
[356]This amount comprises $10,939.09 for repainting the exterior as well as
$2,264.39 for scaffolding the exterior.
[357] Mr Hunt’s evidence was that repainting the dwelling was deferred maintenance.
[358] Mr Gray said that the dwelling needed to be repainted approximately every seven years. As the code compliance certificate was issued in 2009 and Mr Johns’ evidence was that he intended to sell the dwelling in 2014, Mr Gray’s argument was that “but for” the discovery of the deck leaks, Mr Johns would not have needed to repaint the dwelling before he sold it. However, the dwelling needed to be repainted as part of the remedial work, regardless of whether it had been repainted earlier.
[359] I accept the argument put forward by Mr Johns. In my view the cost of repainting is justified and able to be claimed.
Summary losses
[360] I have outlined my findings in relation to the losses and repair costs above. I reserve leave to the parties to come back to the Court if any aspect of it is not clear.
Interest
[361] Mr Johns seeks interest pursuant to s 10 of the interest on the Money Claims Act 2016. Interest is to be calculated from when each relevant expense was paid by Mr Johns to when the judgment sum is paid.
[362] I award interest as claimed, but the amount will need to be recalculated in accordance with this judgment.
General damages
[363] As Thomas J outlined in Body Corporate 346799 v KNZ International Company Ltd (Victopia):70
General damages are a form of compensatory damages. They compensate for losses that cannot be objectively quantified in monetary terms. They cover, for example, pain and suffering, indignity and humiliation and mental distress.
[364]Her Honour went further to say:71
Where the cause of action is in negligence, general damages will be available for distress, vexation, inconvenience and the like if reasonably foreseeable consequences of the breach of duty…
[365] The Council does not dispute the sum claimed and I consider this to be a responsible concession.
[366] Although Mr Davey submitted that Mr Johns’ recent health issues which required his admission to hospital during the trial were not the result of stress associated with this proceeding, despite the evidential difficulties with this submission and even if it was correct, I am satisfied on the evidence that what Mr Johns had to endure as a result of the weathertight defects to his property caused him considerable stress and inconvenience. His life was essentially placed on hold while funds were diverted into fixing the problems so that he could sell the property, as he was unable to purchase a new property without it being sold.
[367] In my view the sum of $25,000.00 claimed is modest — even minimal in the context of what Mr Johns has had to endure. I have no hesitation in awarding
$25,000.00 for general damages.
Costs
[368] Mr Johns has also sought costs. It is appropriate that he is awarded costs. I reserve costs, to be dealt with after this judgment and in terms of my further directions.
70 Body Corporate 346799 v KNZ International Company Ltd, above n 15, at [104].
71 At [106].
Apportionment
Defect-by-defect or overall apportionment?
[369] Case law suggests that the Court may assess contributions to individual defects, but “stand back” to consider apportionment between the parties, having regard to their level of responsibility for them and the most significant causes of any damage.72
[370] However, Heath J noted in Patel the importance of exercising judgment on questions of overall fault and causative potency, to avoid the possibility of a purely mathematical calculation. He said:
[66] I eschew a mathematical approach and, instead, stand back to see where the justice of the case requires an overall contribution to be fixed, having due regard to the level of responsibility and blameworthiness of Mr Patel and the Council, in relation to the three most significant causes of damage to the building.
[371]A similar approach was taken by Hugh Williams J in Boyd v McGregor:73
[79] In considering whether the adjudicator’s percentage apportionment was correct, it is certainly not merely a matter of counting up the number of defects found and apportioning liability on the number for which each party was held responsible since, of course, some defects are the source of greater damage than others.
[372] In Wellington City Council v Dallas, the Council sought compensation from the managing director of a company involved in carrying out remedial work on what turned out to be a leaky home.74 The parties agreed that while the lack of kick outs (a type of flashing) was sufficient on its own to require a total re-clad, there were other defects which allowed water to enter the structure of the house. Before issuing judgment, the Court of Appeal sought submissions on:75
... whether the issue of compensation should be determined solely on the basis of the Council and Mr Dallas’ respective contributions to the kick out problem as a cause of the total loss to the property or whether the apportionment should take into account other defects for which Mr Dallas was not responsible.
72 Patel v Offord HC Auckland CIV 2009-404-301, 16 June 2009 at [40], referring to British Fame (Owners) v MacGregor (Owners) [1943] AC 197 (HL) at 201; and Aberdeen v Township of Langley [2007] BCSC 993 at [62] and [63].
73 Boyd v McGregor HC Auckland CIV-2009-404-5332, 17 February 2010.
74 Wellington City Council v Dallas [2015] NZCA 126.
75 At [5].
[373] In its final judgment,76 the Court concluded that as the defendant had not sought to establish that the Council was liable to the plaintiffs for defects other than the kick out defect, it was impossible for the Court to conclude what causative effect, if any, the other claims against the Council had on its ultimate loss.
[374] In Mackfall v Beattie, a panel of experts identified the main defects in a leaky home, and agreed the extent to which each defect contributed to the overall problem.77 The panel then identified a sequencing of the people who could be held responsible for each defect, without attributing responsibility within the people named. The Weathertight Homes Tribunal made findings within each defect as to who was to be held responsible. Finally, it assessed the percentage that each defect contributed to the overall loss. The issue (less relevant for my purposes) was whether the panel’s attribution of contributing loss for each defect affected liability to the claimants. Simon France J noted that he disagreed with many aspects of the ruling but did not directly comment on the defect-by-defect approach. However, he noted:
[64] What seems clear is that in order to establish personal liability it is necessary to point to a person’s actual role in contributing to the defects.
...
[86] ... One of the difficulties which arises now on appeal is that the findings in the liability section of the Ruling, and those contained in the subsequent apportionment section, do not always match. ...
[375] In Chee v Stareast Investment Ltd, evidence allocating a percentage to each defect was led.78 Wylie J, who was remitting the entire case back to the Weathertight Homes Tribunal, held that on the basis of that evidence it may be possible to apportion liability according to areas of leakage and if so, that should be done.79
[376] I consider in this case an overall apportionment approach is justified, bearing in mind that not all of the parties primarily responsible for each defect are liable for all of them.
76 The Court had previously issued an interim judgment: Wellington City Council v Dallas [2014] NZCA 631.
77 Mackfall v Beattie HC Auckland CIV 2011-485-82, 22 December 2011.
78 Chee v Stareast Investment Ltd HC Auckland CIV 2009-404-5255, 1 April 2010.
79 The question to be asked was whether the loss suffered by Mr and Mrs Chee was indivisible, or whether alternatively a rateable division could be made.
What percentage is appropriate in this case?
[377] In determining the amount of contribution recoverable, the touchstone is what a Court finds “to be just and equitable having regard to the extent of that person’s responsibility for the damage”.80 This is a question of fact.81 The Court is not strictly bound by precedent, however, in defective building cases, the generally accepted allocation of responsibility between builder and Council is 80 per cent/20 per cent.82 In Carrington v Easton, Venning J observed that in some cases the Council will have a lesser responsibility; in only the rarest cases will it be more, however, this was obiter given that he decided in that case that an 80 per cent/20 per cent allocation was appropriate.83
[378] The assessment of contribution for apportionment of liability is not a mathematical exercise, and involves discretion.84 In Patel v Offord, Heath J referred to nine relevant factors identified by Groves J in Aberdeen v Township of Langley:85
(a)the nature of the duty owed by the tortfeasor to the injured person;
(b)the number of acts of fault or negligence committed by a person at fault;
(c)the timing of the various negligent acts;
(d)the nature of the conduct held to amount to fault;
(e)the extent to which the conduct breaches statutory requirements;
(f)the gravity of the risk created;
(g)the extent of the opportunity to avoid or prevent the accident or the damage;
80 Law Reform Act, s 17(2); and Patel v Offord, above n 62, at [34].
81 Stephen Todd (ed) Todd on Torts, above n 27, at 1306–1307.
82 Mount Albert Borough Council v Johnson [1979] 2 NZLR 234 (CA) at 241; and Carrington v Easton [2013] NZHC 2023 at [61].
83 Carrington v Easton, above n 78, at [61].
84 Patel v Offord, above n 62, at [35], citing British Fame (Owners), above n 62, at 201.
85 Aberdeen v Township of Langley, above n 62, at [62] and [63].
(h)whether the conduct in question was deliberate, or unusual or unexpected; and
(i)the knowledge one person had or should have had of the conduct of another person at fault.
[379] The following cases involve apportionment that differs from the usual 80/20 division:
(a)In Body Corporate 188529 v North Shore City Council (Sunset Terraces),86 when dealing with a case involving a developer with hands on experience as a builder, the judge apportioned responsibility at a rate of 85 per cent to the developer and 15 per cent to the Council.
(b)In Hitex Building Systems Ltd v I C Holyoake,87 where the issue to do with watertightness was associated with the cladding that had been installed, the Court apportioned liability to the installer and director of the cladding company at a rate of 73 per cent: the developer at 10 per cent, the vendors at 5 per cent, the Council at 10 per cent and the pre- purchase inspector at 2 per cent.
(c)Boyd v McGregor was a case where the supervising builder’s contribution to losses was found to be 60 per cent, the labour only builders (there were two) 20 per cent (10 per cent each) and the Council 20 per cent.88
[380]Accepting that it is a matter for the Court, Mr Robertson submitted:
(a)An 85/15 per cent contribution as between Mr Davey and the Council was appropriate bearing in mind the following factors:
86 Body Corporate 188529 v North Shore City Council (Sunset Terraces)
87 Hitex Building Systems Ltd v I C Holyoake [2014] NZHC 475.
88 Boyd v McGregor, above n 63.
(i)Mr Davey was the developer and had a hands-on role as head contractor;
(ii)Mr Davey was involved in decisions about the building elements that caused the main defects, e.g. the dispute with the roofer over the saddle flashing, the decision to have windows that were flush without obtaining further details from the architect, his application of the membrane to the deck, his involvement in the decision not to put sufficient ventilation into the walls.
(iii)The level of the Council’s liability for the defects, however, I place less weight on the matters Mr Robertson submitted were relevant here, as in my judgment as I have outlined above, the Council’s negligence extends further than that which it accepted.
(b)For the building parties against whom the Council have sought a contribution in its proceedings, Mr Robertson submitted that their contribution should be:
(i)60 per cent to the roofer because of the decision to install the cap flashing knowing that the saddle flashing was inadequate and because of the causative effect of the roofing issues.
(ii)20 per cent to the plasterer because of his decision to drill the holes and not to form proper perpends.
(iii)The balance of 20 per cent to the builders (jointly and severally) because of their involvement in fixing the inappropriate saddle flashings which have generated the need to re-clad the building and in relation to their involvement in the sequencing of the building paper/membrane interface on the deck.
[381] Mr Shore, counsel for NLR submitted that Mr Johns contributed to the damage by failing to maintain the roof. Although Mr Shore accepted that maintenance would not have remedied the defect, he submitted that better maintenance may well have meant that the defects were identified earlier and that there would therefore have been less of a loss suffered. I do not accept that maintenance would have made much of a difference to the extent of the damage caused by the defects. Further, I am satisfied that Mr Johns acted promptly and at great expense to remedy the defects when they became apparent.
[382]In relation to the Council, Mr Shore submitted:
(a)a 25 per cent apportionment would be appropriate because the weathertightness issues and risks were well known and understood by reasonably experienced and expert pre-purchase inspectors post-2005.
(b)the design of the property had what were accepted to be “high risk” design features under the E2/AS1 risk factor matrix.
[383] In relation to Mr Davey, Mr Shore submitted that he ought to shoulder a significant portion of the liability in a range of 30 to 60 per cent. Mr Shore submitted 40 per cent would be an appropriate reflection of Mr Davey’s duty of care arising from his role as the developer responsible for the overall direction of the build.
[384] In relation to ECDL, Mr Stewart and Mr Gujer, he submitted that the apportionment should be 7.5 per cent.
[385] In relation to Concept Plastering and Mr Richardson, he submitted that their share should be 7.5 per cent.
[386] In relation to Mr Bell, it was submitted his liability should be 5 per cent and in relation to the roofer he submitted an overall collective liability amounting to 15 per cent to be divided between Westgate 7.5 per cent, NLR 7.5 per cent.
[387]ECDL did not offer any suggestions for apportionment of liability.
[388] Taking an overall approach, I consider the following to be just and equitable apportionment:
(a)Mr Davey 40 per cent;
(b)The Council 25 per cent;
(c)NLR 20 per cent;
(d)ECDL, Mr Gujer and Mr Stewart 10 percent; and
(e)Concept Plastering 5 per cent.
[389] I have included the apportionment for Mr Bell in the Council’s apportionment given their settlement with him and Bell Builders.
[390] I have not included an apportionment for Westgate given that it has been wound up. Were it to have been included in the mix, I would have reduced only slightly the apportionment for Mr Davey and NLR.
[391] In case there are any issues associated with the apportionment I have adopted in light of the separate proceedings before the Court, I reserved leave for the parties to file further memoranda.89 Following on from the memoranda filed, I make the following findings:
(a)On 23 November 2020, the Court made an order pursuant to HCR 10.12, consolidating the proceedings CIV-2019-419-222 and CIV- 2020-419-153. The Council and Mr Davey in CIV-2020-419-153 were the only defendants to the proceeding brought by Mr Johns and they both sought contribution from each other pursuant to section 17 of the Law Reform Act 1936. I have already found both parties liable to Mr Johns for their negligence. In relation to their respective claims for
89 Johns v Hamilton City Council [2022] NZHC 1378, which also results in minor amendments to
[392]and [393] by deleting the last sentences in relation to each paragraph.
contribution I find that both the Council and Mr Davey succeed in their claims for contribution as against the other.
(b)If the Council and Mr Davey were the only parties found liable for the defects, I would only need to apportion their liability. However, I also need to take account of the claims for contribution made by the Council and Mr Johns against other parties in the two proceedings.
(c)I refer to my findings as to the apportioned liability of the Council, Mr Davey, ECDL, Westgate, Concept Plastering, Hamish John Stewart, Daniel Gujer and Mr Bell set out in [388] –[390].
(d)Pursuant to section 17 of the Law Reform Act 1936 and / or in equity, to the extent that any of Mr Davey, the Council, ECDL, Concept Plastering, Hamish John Stewart, or Daniel Gujer pay Mr Johns more than their apportioned liability, then that party is entitled to recover the balance from any other of these parties and I enter judgment accordingly.
RESULT
[392] This judgment is final in all respects apart from in relation to the matters referred to in paragraph [360], [388] and [391] above which have now been resolved, but is still outstanding in some respects as to costs.
[393] Costs are reserved and, if not agreed, are to be addressed by way of memoranda within 14 days of the receipt of the judgment. Any memoranda in reply (not exceeding three pages) are to be field no later than 14 days thereafter. Costs will be dealt with on papers unless the Court considers upon reading the memoranda that a further hearing is required.
Harland J
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